Dark ages of cost accounting: The role of miscues in the literature

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The Accounting Historians Journal Vol. 14, No. 2 Fall 1987
George J. Staubus UNIVERSITY OF CALIFORNIA, BERKELEY
THE DARK AGES OF COST ACCOUNTING: THE ROLE OF MISCUES IN THE LITERATURE
Abstract: The conceptual and theoretical development of cost ac-counting has been at a standstill for several decades, despite its poor state and drastic changes in its environment. The concept of cost itself and related concepts are both unclear and unrelated to relevant concepts in other areas of economics, and several critical issues remain unresolved.
Part of the blame for this state is laid at the door of those writers and interpreters of several key pieces of literature, or sets of writings on specific topics. The works involved in the "miscues" are J. M. Clark's emphasis on different costs for different purposes in his Studies in the Economics of Overhead Costs; Paton and Littleton's difficulties in clarifying the cost concept; the American Institute of Accountants' definition of depreciation accounting as systematic and rational allocation; the direct/variable costing lit-erature; and the rejection of allocation. An effort is made to show how each of those miscues harmed the cause of cost accounting.
Part I: Issues
"We may start with the general proposition that the ter-minology of costs is in a state of much confusion . . . . " [Clark, 1923, p. 175]. The persistence of that state to this date must be an outcome beyond Clark's worst fears, but that outcome appears to be of no concern to the accounting profession. Until the mid-1980s, it was rare to see or hear expressions of dis-satisfaction by accountants regarding the early twentieth cen-tury style of product cost accounting that is prevalent, from all indications, in American enterprises and textbooks. Now we see a few signs of life [Hakala, 1985; Hunt et al., 1985; Johnson and Kaplan, 1987; Kaplan, 1986; NAA, 1985; Seed, 1984; and others]. Nevertheless, a report that product cost accounting is emerging from the dark ages of its conceptual and theoretical development would be premature.
In this paper, I show why I consider the conceptual and theoretical development of cost accounting to have been in the dark ages for several decades, then go on to explore the thesis that the writing and interpretation of several especially